BGR Energy Systems shares hit a 2% lower circuit after Chennai water board cancels order worth ₹440 crore

2 min read | Updated on September 24, 2024, 15:43 IST

SUMMARY

Chennai Water Supply Board terminated a contract worth ₹440 crore for the design, construction and operation of a Tertiary Treatment Reverse Osmosis system. The construction order was terminated due to project delays and quality issues.

BGR Energy hits 2% lower circuit after Chennai water board cancels order worth ₹440 crore

BGR Energy Systems Limited shares hit a 2% lower circuit at ₹50.34 apiece on the NSE on Tuesday, September 24, after the company announced that the Chennai Water Supply Board had terminated a construction contract.

In a filing to the stock exchanges on Monday, the company said that it received an intimation of termination of the contract from the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB).

The company informed the bourses that the contract, worth ₹440 crore, pertains to the design, construction, and operation of a 45 MLD capacity Tertiary Treatment Reverse Osmosis (TTRO) system at Kodungaiyur.

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This project also included the supply and installation of ductile iron transmission mains for transporting product water to various industries in the Manali area of Chennai.

The scope of the project included the construction and operation of the TTRO plant, as well as the installation of ductile iron transmission mains to deliver treated water to industries in the Manali area of Chennai.

The contract was awarded to BGR Energy on January 4, 2017, with ₹235 crore designated for the construction phase and ₹205 crore for 15 years of operation and management of the facility.

Due to a delay in project execution and concerns regarding the quality of the RO-treated water, the CMWSSB issued a termination letter on September 18, 2024, which BGR Energy received on September 23.

The company said in the stock exchange filing that the termination of the contract would decrease turnover and, correspondingly, profit related to pending contracts.

However, there will be no significant impact on the company's overall financials, operations, or other activities.

Last month, the company also faced cancellation of another contract by the Jharkhand Urja Sancharan Nigam Limited (JUSNL) regarding the supply, installation, testing and commissioning of a 132/33 kV GIS at Sarath, Sundernagar and Chattarpur.

The contract was terminated due to delays in completing the agreed scope of supply, according to the company.

BGR Energy Systems Limited, based in Chennai, operates in the utility sector and offers a range of services, including product manufacturing and project execution.

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